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Please register for Tuesday meetings by Friday at 3:00 pm and register only for the parts you will attend. The deadline for canceling dinner reservations without charge is Monday at 12:00 pm Members registering after Friday afternoon may attend the PD & Social Hours, but will be on a waiting list for Dinner. As Dinner cancellations occur on Monday, we will notify members on the waiting list. If you find you cannot attend any part of the meeting, please call or email our office so we can adjust our numbers. For questions, please contact us at 713.839.0808 or info@feihouston.org.

Wayne Penello, Founder and President of Risked Revenue Energy Associates, will discuss the importance of and methods for modeling commodity price risk using financial metrics that drive budgetary and strategic decisions. Objective measures of risk provide Management with a disciplined platform for the stress testing of key financial metrics. They can also be used to develop a road map to highlight and communicate to Senior Staff potential challenges to budgetary success. Case studies will be presented to demonstrate strategies that have been used to mitigate risk to, and maintain key metrics above, targeted performance thresholds.

Discussion Topics

The Envelop Problem – range estimates can be used to manage uncertainty

Risk Measured as;

Commodity price

Revenue

Free cash flow

EBIDAT

Debt/ EBIDAT ratio

Key Questions;

Why hedge?

How much should be hedge?

When should hedges be placed? Should we do it all at once or scale into the hedge positions?

Which periods should be hedged and which instruments should be used?

Will the hedges ensure budgetary success or should additional risk mitigation strategies be used?

Wayne Penello is the CEO and Founder of Risked Revenue Energy Associates (R^2 or “R-squared”). The firm develops customized financial solutions for corporations, government agencies and private equity firms that wish to hedge their exposure to energy prices. R^2’s proprietary hedging analytics helps clients to achieve two goals: first to consistently meet or exceed budgetary targets and second that hedges generate profits over time. Clients using R^2 analytics have been paid more than $9 billion for their hedging activities.

Mr. Penello has spoken throughout North America on risk management and other energy related topics. He has 35 years of market-making, option trading and asset management experience in the energy industry. He began his career on the New York Mercantile Exchange, where he was a market maker and served as Ring Chairman of options trading. Subsequently, he held positions managing globally distributed energy assets for Vitol S.A., Vitol U.S.A., Tenneco Gas Marketing and Torch Energy. Mr. Penello was formerly a research scientist. He holds a Masters degree in Marine Sciences from Stony Brook University and an undergraduate degree in Marine Biology from Southampton College.